FEAR OF INTEREST RATE HIKE PUTS CHILL IN RETAIL STOCKS

NEW YORK — Even when August sales reports were positive, investors, for the most part, showed little relish for retail shares Thursday, as concerns over interest-rate hikes enveloped Wall Street once again.
The Dow Jones Industrial Average tumbled 94.67 to 10,843.21 Thursday amid fears that the Federal Reserve will raise short-term interest rates for a third time this year, according to market watchers.
Also affecting retail stocks were the profit warnings issued by two of the country’s largest chains, Sears, Roebuck and J.C. Penney. Sears saw its shares drop 3 11/16 to 33 1/2, while Penney’s fell 1 11/16 to 36 7/16.
Talbots, however, was a star, surging 4 11/16 to 35 11/16 after reporting August same-store sales climbed 18.1 percent.
Wal-Mart also rose, adding 11/16 to 45 11/16.
But a number of department and discount stores were caught in the down draft, including May Department Stores, down 1 1/16 to 38 1/4; Ames Department Stores,
2 3/16 to 27 7/8; Dayton Hudson, 1 5/8 to 56 5/8; Federated Department Stores, 2 5/8 to
44 3/4; Dillard’s, 7/8 to 22 1/2, and Saks Inc., 5/16 to 16 5/16.
Specialty stores taking hits included Gap, off 1 13/16 to 38; Limited, 11/16 to 38 7/16; Intimate Brands, 1 1/16 to 39 1/4, and Pacific Sunwear of California, 1 1/2 to 23.
Sunglass Hut tumbled 3 1/8 to 9 7/8 — a 24 percent drop — after Morgan Stanley Dean Witter cut its rating on the stock to “outperform” from “strong buy.”
Tiffany & Co. slipped
1 11/16 to 51 after the jeweler said it would stop its wholesale distribution.
Few fashion vendors posted notable declines or gains. On the downside were Estee Lauder, off 1 1/8 to 44 3/4; Fossil, 1 15/32 to 30, and the American depository receipts of LVMH, 1 3/4 to 59 5/8.